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EIRNational Economy
How the government and
Army built America’s railroads
by Anton Chaitkin
The lightning is his slave; . . .
The tempest is his steed, he strides the air
—Percy Shelley, Prometheus Unbound, 1819
The Lord of the universe . . . said unto them, be fruitful,
and multiply, and replenish the earth, and subdue it. . . .
[We] perform His will in the subjugation of the earth
for the improvement of the condition of man.
—U.S. President John Quincy Adams, 1828
Should nations promote productive industry through government subsidy or other encouragement? Or, should financiers and their spokesmen be listened to, respectfully, when
they denounce such efforts as “corruption” and “government interference”?
Poor countries are threatened with terrorism and disunion.
But they are warned, in the name of human rights, not to
allow their armed forces to be nation-builders. Is such advice
wisdom, or hypocrisy?
Public officials are everywhere confronted with infrastructure breakdown, transport crises, and traffic gridlock.
Must their impotent lament, that no resources are available to
solve these problems, be the final word?
The proud record of America’s own creation of railroads
is a useful guide for national strategists everywhere in answering these questions. This record demonstrates the power of the
American System of political economy, as against the British
“free-trade” system of colonialism and looting.
In the United States, the railroads were planned by the
Army, and financed by government, as projects vital for national defense and economic development. Then, Americans
went abroad to build railroads, to secure other nations as
America’s allies against British Empire geopolitics.
These assertions of ours fly in the face of enormous public
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prejudice, resulting from indoctrination by British “freetrade” propagandists. History texts agitate against the railroad
as a locus of corruption and an instrument for the oppression
of the masses.
Leftist writers feature such “robber barons” as Cornelius
Vanderbilt, who bought up railroad lines after they had been
built, “watered” the stock, and stole vast sums of money. The
socialist writer Gustavus Myers1 passes over the whole story
of how the transport network was created, suggesting only
that the public was tricked into paying for building the rail
lines and the canals.
Writers favoring “free trade” expound against the legislatures and such statesmen as Abraham Lincoln for the supposed folly of committing public money and credit to public
works. In recent years, the post-industrial speculators’ frenzy
has gone so far that their theoreticians have denounced America’s 19th-century railroad building altogether; University of
Chicago economist Robert W. Fogel won the 1993 Nobel
Prize for his claims that slavery was productive and efficient,
while railroads were unnecessary.
But, the purpose and the republican mentality of the railroads’ strategists, and the political and financial means by
which the lines were built, are simply absent from the general
historical literature; the reigning orthodoxy thus avoids a
nasty embarrassment.
During 1997, a work was made available in print which
will aid in overcoming this deficiency: Stanford University
published the first English translation of Franz Anton von
Gerstner’s 1840 report on the early American railroads.2
1. Gustavus Myers, History of the Great American Fortunes (New York:
Random House, 1937).
2. Franz Anton Ritter von Gerstner, Die innern Communicationen der Vereinigten Staaten von Nordamerika, originally published 1842-43, English
EIR
July 17, 1998
© 1998 EIR News Service Inc. All Rights Reserved. Reproduction in whole or in part without permission strictly prohibited.
Shipments from the
Midwest arrive by rail at
the grain elevator on
61st Street on the East
River in New York City.
America’s great
railroads were statefinanced and Armyengineered. From Frank
Leslie’s Illustrated
Newspaper, Nov. 10,
1877.
Gerstner’s detailed evaluation of U.S. rail lines and canals,
written to instruct the Russian government on America’s
progress, has the great value that it is not censored or filtered
through later anti-industrial or anti-American ideology.
Rather, the author was himself a civil engineer and railroad
builder who admired the U.S.A., and knew and shared the
enthusiastic outlook of those who actually built America’s
rail lines.
We have worked through Gerstner’s engineering history
of every single U.S. railroad that had been, or was then being
built, in conjunction with other sources which present the
same topic from the standpoint of the Federal government
and engineers, and from the state government political level.3
We have thus gained access to a story which is shockingly
different from the line of the International Monetary Fund,
refuting the lie that national progress somehow arises from
submission to speculators’ demands for unrestrained looting.
As we shall see, America did it another way.
Defending the Union:
the General Survey Act
John Quincy Adams, President from 1825 to 1829, began
ordering U.S. Army engineers to design the country’s first
translation from the German, edited by Frederick C. Gamst, published as
Early American Railroads (Palo Alto: Stanford University Press, 1997).
Gerstner was a German-speaking Czech subject of the Austro-Hungarian
Empire, who allied himself with the Philadelphia-based U.S. nationalists to
such an extent, that he named his U.S.-born daughter, “Philadelphia.”
3. Alan Levinson’s research has been of great help in the present work. See
Levinson, “America’s Railroads: Success Story for Dirigist Nation-Building,” The New Federalist, Jan. 27, 1992.
EIR
July 17, 1998
railroads. Adams made the assignments under the General
Survey Act of 1824. During the previous administration of
James Monroe, that bill had been pushed through Congress
by the two leaders of the nationalist faction, House Speaker
Henry Clay, and Adams himself, who was then Secretary of
State. The act authorized the “President of the United States
. . . to cause the necessary surveys, plans, and estimates, to be
made of such Roads and Canals as he may deem of national
importance, in a commercial or military point of view.”4
The 1824 Survey Act was a political companion to the
nationalists’ protective tariff legislation. In the following
year, Adams was elected President and he appointed Clay
Secretary of State.
The original rail project carried out under the Survey Act,
and America’s first commercial railroad, was the Baltimore
& Ohio, chartered in 1827. President Adams ordered a dozen
or more Army engineers to plan and supervise the B&O’s
construction, to link the Atlantic port of Baltimore with the
Ohio and Mississippi rivers. Adams also deployed Army personnel to start up railroad projects in New York, Alabama,
Georgia, and South Carolina, until the end of his Presidency
in 1829.
Adams’s Secretary of War, James Barbour, explained the
administration’s thinking on these assignments: “The successful introduction of Rail-Roads, into this country, is
viewed by the Department as of great national importance,
and especially any practicable mode of connecting the Atlan-
4. Forest G. Hill, Roads, Rails & Waterways: The Army Engineers and Early
Transportation (Westport, Connecticut: Greenwood Press, 1977), p. 47.
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45
tic States with the Western; . . . so that the commodities to be
found in either can be conveniently and cheaply conveyed to
the other, across the barriers which divide them, and which
. . . offer the most sure and economical means to the Government to convey, to the different parts of the Union, the means
of defence, in the transportation of men and munitions to the
seat of war, wherever it shall exist.”5
Under the General Survey Act, the technologies of steam
power and metal rails were implemented by Army design,
officially, on at least 60 railroads. Army men also worked on
other new lines during personal furloughs, or “in their spare
time,” with official sanction.
President Andrew Jackson, John Q. Adams’s successor,
gradually emerged as an enemy of government economic activities. But in his first term, President Jackson continued
Adams’s initiative of assigning Army engineers to plan railroads. As a senator back in 1824, Jackson himself had voted
for the General Survey Act, and the program was widely
popular. Its high point was reached in 1835, when some 20
U.S. railroads were using active-duty Army personnel in their
construction and management.
The General Survey Act was repealed in 1838, under the
administration of Martin Van Buren. This attack on American
economic development followed on the heels of the destruction of the nationalist-run Bank of the United States, a course
of action promoted by Van Buren and his faction aligned
with the British and Wall Street bankers. Army officers were
ordered to cease aiding railroad construction; active-duty personnel did not resume this role until the 1850s, in the preliminary surveying for the transcontinental railroad.
The government initiative under the General Survey Act
had been indispensable to the development of the railroads.
The U.S. Military Academy at West Point was America’s
only engineering school when railroads began, and the only
significant such school until the Civil War era. West Point’s
officer-graduates made up almost all of the civil engineers
available to plan the lines, and Army regulations were implemented to discipline and organize the new railroad companies.6
Although these companies were mostly private enterprises, state and local governments, and later the Federal government, subsidized all the significant rail lines with public
money and credit, using loans, grants, stock purchases, and
5. Ibid., p. 102.
6. The Corps of Engineers, created in 1802, was directed to locate at West
Point and there to constitute a military academy. From then until the Civil
War, the Academy was controlled by the Army’s Engineer Department and
was operated as the national school of engineering. Most cadets actually
resigned from the Army within a few years after graduating, with the blessing
of the government, so as to supply their vital government-furnished training
to the nation’s enterprises, private and public. Thus, beyond those active duty
officers directly assigned to railroad planning and construction, many more
engineers with Army backgrounds made careers managing the growing U.S.
railway network.
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other means. As with the Army engineering, this public funding was absolutely essential. The biggest private financiers
would not invest in constructing such enterprises, and the
smaller investors could not sustain projects of such scope and
duration without public money and guarantees.
The results of this national commitment were spectacular.
By 1840, after a decade of construction, the United States had
about 3,000 miles of railways in operation, as compared to
1,800 miles in all of Europe, including Britain.
The main issue for President Adams and his nationalist
factional allies, military and civilian, was the strength and
survival of the American Union. The British Empire and its
political friends were still trying to bar America’s westward
expansion (by instigating Indian wars and slaveowners’ landgrabs), a British policy which had been a major cause of the
American Revolution. Canals and railroads would open up
the West, and would strongly link western settlers to the older
northern states. Southern plantation slavery, politically manipulable against the Union, would be potentially overpowered; and westerners would not have to depend on the Mississippi River, flowing through the South, for their market
connections.
John Quincy Adams:
‘Liberty is power’
In his first Annual Message to Congress, President John
Quincy Adams spoke of the government’s powers and duties to foster progress:
“The great object of the institution of civil government
is the improvement of the condition of those who are parties to the social compact, and no government . . . can
accomplish the lawful ends of its institution but in proportion as it improves the conditions of those over whom it is
established. Roads and canals, by multiplying and facilitating the communications and intercourse between distant
regions and multitudes of men, are among the most important means of improvement. . . .
“For the fulfillment of those duties governments are
invested with power, and . . . [for] the progressive improvement of the condition of the governed . . . the exercise
of delegated powers is a duty as sacred and indispensable
as the usurpation of powers not granted is criminal and
odious. . . .
“The spirit of improvement is abroad upon the earth.
It stimulates the hearts and sharpens the faculties not of
our fellow-citizens alone, but of the nations of Europe and
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July 17, 1998
West Point and France’s Ecole Polytechnique
The small U.S. Army was prepared for its railroad work by
the extraordinary transformation which had just taken place in
the Academy at West Point. Gen. Winfield Scott and Maj.
Sylvanus Thayer had spent many months in France after the
fall of Napoleon, immersing themselves in the methodology
of the Ecole Polytechnique, where Gaspard Monge, Lazare
Carnot, and others had educated a new generation of French
leaders in science and military strategy.
In these pages, one year ago, Pierre Beaudry described
the Ecole’s unique educational methodology as “based on
universal principles which subsumed and linked together
methods applicable to both Arts and Sciences. . . . Its principal
mission was to give the new Republic . . . scientists and engineers to serve in public works as well as the military. Also
were required, numerous architects, manufacturers, artists,
physicists, chemists, etc.; and the polytechnique method of
descriptive geometry instituted by Monge served as the theoretical and practical epistemological basis for that purpose.”7
7. “The Bourbon Conspiracy that Wrecked France’s Ecole Polytechnique,”
EIR, June 20, 1997.
An example of the Ecole’s republican approach can be seen
in Carnot’s discussion of the importance of perspective drawing, in classes for beginners: “Linear perspective . . . is calculated mathematically [but] aerial perspective . . . can only be
grasped by the sentiment. By comparing these two sciences,
where one is sensual, the other ideal, the methodical course
of one will help penetrate the mysteries of the other. . . .
[Aerial perspective in painting is] the art of generating ideas
by means of the senses, of acting on the soul by the organ
of vision. It is in this way that it acquires its importance,
that it competes with poetry; that it can, like poetry, enlighten
the mind, warm the heart, excite and nourish higher emotions. We shall emphasize the contributions that it can bring
to morality and to government; and how, in the hands of
the skillful legislator, it will be a powerful means of instilling
horror of slavery, and love of the fatherland, and will lead
man to virtue.”
The American officers returned from Paris with a thousand-volume library on military art, engineering, and mathematics, a collection of maps, and French experts in descriptive
geometry who would now train Americans. Thayer implemented the Ecole regime as West Point Superintendent, while
of their rulers. . . . [L]et us not be unmindful that liberty is
power; that the nation blessed with the largest portion of
liberty must in proportion to its numbers be the most powerful nation upon earth, and that the tenure of power by man
is, in the moral purposes of his Creator, upon condition it
shall be exercised to ends of beneficence, to improve the
condition of himself and his fellow-men. While foreign
nations less blessed with that freedom which is power than
ourselves are advancing with gigantic strides in the career
of public improvement, were we to slumber in indolence
or fold up our arms and proclaim to the world that we are
palsied by the will of our constituents, would it not be to
cast away the bounties of Providence and doom ourselves
to perpetual inferiority?”1
On July 4, 1828, President Adams presided over
groundbreaking in Washington for the Chesapeake and
Ohio Canal. A Federal and multi-state joint enterprise, the
canal was to run parallel to the Baltimore & Ohio Railroad,
Adams’s other great project, for which ground was also being broken the very same day in Baltimore. President Adams told the assembled cabinet officers and foreign ambassadors:
“We are informed by the holy oracles of truth, that, at
the creation of man, male and female, the Lord of the
universe, their Maker, blessed them, and said unto them,
be fruitful, and multiply, and replenish the earth, and subdue it. To subdue the earth was, therefore, one of the first
duties assigned to man at his creation; and now, in his
fallen condition, it remains among the most excellent of
his occupations. To subdue the earth is pre-eminently the
purpose of this undertaking. . . . I call upon you to join me
in fervent supplication to Him from Whom this primitive
injunction came, that He would follow with His blessing,
this joint effort of our great community, to perform His
will in the subjugation of the earth for the improvement of
the condition of man—that He would make it one of His
chosen instruments for the preservation, prosperity, and
perpetuity of our Union. . . .
“In praying for the blessing of heaven upon our task,
we ask it with equal zeal and sincerity upon every similar
work in this confederacy; and particularly upon that which,
on this same day, and perhaps at this very hour, is commencing from a neighboring city. It is one of the happiest
characteristics in the principle of internal improvement,
that the success of one great enterprise, instead of counteracting, gives assistance to the execution of another. May
they increase and multiply, till, in the sublime language of
inspiration, every valley shall be exalted and every mountain and hill shall be made low; the crooked straight, the
rough places plain.”2
1. Dec. 6, 1825, in Messages and Papers of the Presidents, Vol. II (New
York: Bureau of National Literature, 1897), pp. 877, 882.
2. William H. Seward, Life and Public Services of John Quincy Adams
(Auburn, N.Y.: Derby, Miller and Company, 1849), pp. 221-223.
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July 17, 1998
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47
Whistler, would paint Anna’s portrait, the famous “Whistler’s
Mother.”
George Washington Whistler became the most celebrated civil engineer of his day. He had graduated
from West Point in 1819, a master of
the projective geometry taught in the
new Thayer-reorganized curriculum. A serious musician, he was
nicknamed “Pipes,” because of his
facility with the flute.
Beginning with their first report
to the B&O Board of Directors on
April 5, 1828, the builders used
Army Engineer Department accounting and reporting procedures,
and adhered to Army technical and
administrative standards as developed by General Scott.
Company president Philip E.
Franz von Gerstner’s rendering of track and bridge construction for the Illinois Central
Railroad. Abraham Lincoln led the state government to create the railroad, and later worked
Thomas asked McNeill for a set of
for its completion with Federal land grants.
written regulations for the railroad.
The result was “similar to those
which govern generally in the U.S.
General Scott reorganized the U.S. Army to ensure profesEngineer Department,” wrote McNeill, and “when I thought
sional rigor and accountability.
applicable, I have transcribed literally from the printed regulaPresident Monroe created a Board of Engineers for Intertions of the U.S. Engineer Department.”8
nal Improvements, and appointed Gen. Simon Bernard its
This detailed accountability and formal, Army-origileading member. Educated at the Ecole Polytechnique, Bernated hierarchy, is reported to have been unique in the Amernard had been in command of France’s army engineers in the
ican business community. The B&O’s activities were written
1790s, had designed U.S. East Coast forts, and led the Board
up in railroad periodicals and were closely studied by other
of Engineers when President Adams began assigning Army
railroad managers. The Army reassigned its officers off the
personnel to plan U.S. railroads. Bernard later returned to
B&O in 1830, but the regulations adopted afterward were
France and was Minister of War (1836-39).
along the same lines as those instituted by the Army personnel.
The team that built the B&O railroad
In 1836, after many intervening projects, McNeill was
The War Department sent engineers to begin surveying
assigned to the crucial Western Railroad of Massachusetts as
for the Baltimore & Ohio Railroad in 1827. During the first
consulting engineer, with Capt. William H. Swift as resident
two years, three survey brigades were headed by Col. Stephen
engineer. Whistler, who had since resigned from the Army,
H. Long, Dr. William Howard, and Maj. William Gibbs Mcwas also at the Western Railroad, and was to become its
Neill. As the surveying progressed, the B&O company and
chief engineer. Boston to Albany through-service was inauthe Adams administration decided to send Major McNeill,
gurated in December 1841. The Western Railroad adopted
Lt. George Washington Whistler, and another engineer to
from the outset procedures like those used in the Army.
England to gather intelligence on railroad construction.
Captain Swift had a free hand in establishing procedures
While Colonel Long, Major McNeill, and Lieutenant
for accounting and reporting, and created a “transportation
Whistler managed B&O engineering activities in 1829-30,
department,” similar to the staff, as distinguished from line
Whistler superintended the first track-laying. Ten to twelve
officers, in the Army.
Army engineers were in the company’s service at any one
In response to a head-on train collision, Whistler was
time.
asked to set up tight regulations for all trains and all emMcNeill and Whistler would go on from the pioneering
B&O project, to work together in engineering the majority of
8. Charles F. O’Connell, Jr., “The Corps of Engineers and the Rise of Modern
America’s new railroads. In 1831, Whistler married McManagement, 1827-1856,” in Military Enterprise and Technological Change
Neill’s sister Anna; their son, artist James Abbot McNeill
(Cambridge, Massachusetts: The MIT Press, 1985), p. 99.
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July 17, 1998
ployees. The Western Railroad’s
“Report on Avoiding Collisions and
Governing the Employees” (Nov.
30, 1841), is seen as a milestone in
U.S. railroad management practices.
There was an important militarycivilian overlap on the Pennsylvania
Railroad. Chief engineer J. Edgar
Thomson hired West Point graduate
Herman Haupt as his chief assistant
in 1847. After studying the New England railroads, Haupt reorganized
the Pennsylvania’s management to
be like the U.S. military. Line officers ran the day-to-day railroad operations; staff officers in a General
Transportation Office concentrated
on the company’s broader strategic
problems. With Thomson as president and Haupt as chief engineer, the
Pennsylvania grew to be the counGerstner’s drawing of tracks and machinery, Virginia, ca. 1840. State government and
localities heavily subsidized all railroads in Virginia before the Civil War.
try’s largest railroad, and served as a
tool of the nationalists and their military-scientific-industrial complex in
Philadelphia. Haupt served as chief
military engineer of Union forces during the Civil War; the
infrastructure, primarily railroads. Local and county governPennsylvania Railroad’s vice president, Thomas A. Scott,
ments contributed another $125 million. Between 1861 and
1890, state and local aid to railroads amounted to around
was Assistant Secretary of War, and ran all government rail$250 million.
ways and transportation lines.
Altogether, state and local governments provided more
The pattern of government-financed railroads
than half of the capital invested in early American railways.
The Baltimore & Ohio, America’s first great trunk line,
Not only that, but, quite often, private sources would make
was organized in 1827. To begin with, Baltimore community
railroad construction loans only if the state government guarleaders sold $1.5 million in B&O bonds to private investors,
anteed repayment.
and the city of Baltimore bought $500,000 worth of bonds.
Most of the private capital came from small investors—
The city bought $1 million more during 1828, while private
merchants, local manufacturers, farmers, and tradesmen—on
investors subscribed to another $1.5 million. In 1833, the state
the route of a proposed railroad. There was virtually no eastern
of Maryland granted the railroad company $500,000. The
capital available for the construction of western railroads, and
the easterners who invested in their section’s railroads were
company ran out of money in 1836, whereupon the state of
Maryland and the city of Baltimore each bought $3 million
those small investors who responded to civic leadership of
in B&O bonds. During the depression of 1837, Baltimore
the statesmen and promoters.
allowed the railroad to pay its debts with $1.5 million in “railThe Charleston and Hamburg was a Chamber of Comroad notes,” in lieu of money. The 178 mile line to Cumbermerce affair, backed by leading merchants. The Delaware,
land, Maryland was completed in 1842; Wheeling (now West
Lackawanna, and Western Railroad was backed by the ScranVirginia) was reached in 1853, thanks to a $500,000 subscripton family, to aid their iron operations. Small coal operators
tion from the city of Wheeling.
backed the coal-carrying railroads, whose construction was
promoted by Nicholas Biddle, Mathew Carey, and other naThe state and local government financing given to the
tionalists.
B&O was typical of American rail lines during their construction phase.
Neither the New York stock market, nor the wealthy BosOn local lines of minor importance, municipalities might
ton bankers played a significant role in the creation of the
provide the main, or the only government aid. In New York
American railroad system. As historian George Taylor wrote,
State, around 300 localities invested in railroads.
“The New York Stock Exchange does not appear to have
But, state governments led the way; up to 1861, they put
played an important role in providing capital for early railroad
in about $300 million in cash and credit for transportation
construction. Only a small proportion of railroad stocks were
EIR
July 17, 1998
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49
even listed before 1860, and among these, leading roads such
as the Pennsylvania and the Baltimore & Ohio, do not
appear.”9
Later, these big financiers bought up lines and began to
treat them as speculative instruments, with very unwholesome results.
Pennsylvania built the state-owned Philadelphia & Columbia and some other lines, to connect with the thousands
of miles of state canals. The gigantic Pennsylvania Railroad
Co. was jointly owned by private investors and the city of
Philadelphia. The state built the Main Line, then sold it after
completion to the Pennsylvania Railroad Co. The Philadelphia & Reading (“Reading Railroad”) was about one-quarter
owned by the Bank of the United States, whose president,
Nicholas Biddle, was also the fiscal manager for the Reading.
9. George Rogers Taylor, The Transportation Revolution, 1815-1860 (New
York: Rinehart & Co. 1951), p. 100.
Army-engineered rail
construction projects
The following were among the railroad projects carried
out under the General Survey Act of 1824.
Year
begun
Route or company
1827 Baltimore & Ohio (Baltimore to Wheeling, now
W.V.)
1828 Hudson, New York, to Berkshire County, Mass.
Ithaca to Owego, New York
Ithaca to Catskill, New York
Lake Cayuga in New York, to Susquehanna
River
Tennessee River to Savannah River, and
Tennessee River to Altamaha River (to make
choice between canal and railroad)
1829 Catskill to Canajoharie, New York
Charleston and Hamburg (South Carolina)
(In 1830 this railroad ran the first practical
locomotive in the United States.)
1830 Baltimore and Susquehanna (Md. and Pa.)
New Jersey Railroad Company
1831 Paterson and Hudson (N.J.) (The line’s first two
locomotives were named The McNeill and
The Whistler.)
Winchester to Harpers Ferry, Va.
Ohio Canal at Akron to the Hudson River at
Jersey City
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Biddle used every possible resource of the Bank of the
United States to develop American railroads and canals. It is
often said that “the British” or “the Rothschilds” built America’s railroads. This is simply untrue. The fact is that, by 1853,
largely through the marketing of state bonds and other railroad
securities by the Bank of the United States, 26% of American
railroad bonds outstanding had come to be foreign-owned;
railroad stocks, valued at nearly twice the figure for bonds,
were only 3% foreign-owned. As time went on, however,
the Morgans, Rothschilds, and other British Crown-linked
financiers came to hold a dominant interest in American railroads. Ultimately, this financial power was used to loot the
existing lines, rather than to develop them.
The state of Georgia built the Western and Atlantic Railroad, completed from Atlanta (the railroad terminus city,
which was named for the railroad) to Chattanooga, Tennessee
in 1851. Virtually no private capital was available, so the state
owned and managed the line until the Civil War.
Year
begun
Route or company
1832 Boston and Providence, (Mass. and R.I.)
Providence and Stonington (R.I. and Conn.)
New London, Conn. to Providence, R.I.
New London, Conn. to Worcester, Mass.
Potomac Creek to Fredericksburg, Va.
New York, N.Y. to Lake Erie.
St. Francisville, La. to Woodville, Miss.
Williamsport, Pa. to Elmira, N.Y.
Mad River to Lake Erie (Ohio)
Ohio River to Lake Erie (Ohio)
1833 Across southern Vermont
Pearl River to Yazoo River (Mississippi)
(canal or railroad)
1834 Across the isthmus of Michigan
Memphis, Tenn. to the Atlantic Ocean
Fredericksburg, Va. to the Ohio River
1835 Taunton and New Bedford (Mass.)
Long Island Railroad (New York)
Portland, Maine to Quebec, Canada
Boston, Mass. to Whitehall, N.Y.
Detroit to Pontiac, Mich.
Pensacola, Fla. to Columbus, Ga.
Four surveys in Indiana
One or two others in New England states
1836 Projects in Maine, Massachusetts, Rhode
Island, Connecticut, New York, Maryland,
North Carolina, and Missouri, and from
Charleston, South Carolina, to Cincinnati, Ohio
Source: Forest G. Hill, Roads, Rails & Waterways
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July 17, 1998
Virginia enacted a unique construction subsidy: The government
would buy three-fifths of the stock
shares of any railroad built in the
state, thus guaranteeing the market
for such stocks. Up to the Civil War,
Virginia’s state government provided more than $21 million for railroad construction, with much more
coming from localities. In the same
period, North Carolina’s state government went into debt for more than
$9 million to subsidize railroad development. In the Southern states before the Civil War, more than 55%
of railroad capital was provided by
states and local governments.
Private railroads failed in Michigan, so, in 1837, the state government, defying the great economic
depression that followed the destrucCurrier & Ives cartoon mocks the statue (which today stands in front of New York’s Grand
Central Station) unveiled in 1869, honoring Cornelius Vanderbilt. He seized railroads built
tion of the Bank of the United States,
at state expense, then “watered” the stock—i.e., issued shares to himself, thus diluting the
began building an ambitious set of
value of publicly held shares.
rail lines. By 1846, the Michigan
Central and Michigan Southern were
in operation. Under financial duress,
law enacted on Sept. 20, 1850, gave Federal lands as grants
the state was then forced by creditors to privatize the lines
to Illinois, Mississippi, and Alabama to build railroads,
and specify in the state constitution that it would never build
amounting to a subsidy of 3.7 million acres.
such lines again.
The Illinois Central Railroad was finally completed, in
Indiana had spent more than $1.6 million for a rail line
1856,
as a direct result of the Federal subsidy. Its $23 million
from Madison to Lafayette when, in 1843, the state was forced
cost
came
largely from mortgages on Federal lands donated
to turn it over to the Madison and Indianapolis Railroad Co.
to
the
company.
Less than a sixth of the construction money
The line was completed 1847, as the first railway in the state.
was
contributd
by
stockholders.
Up to 1857, Missouri authorized loans of almost $25 milFederal
land
grants
in the 1850s totalled 25,464,018
lion to seven railroad companies to build their lines.
10
acres,
going
to
Alabama,
Arkansas, Florida, Illinois, Iowa,
In its first year of statehood, 1858, Minnesota amended its
Louisiana,
Michigan,
Mississippi,
Missouri, Wisconsin, the
constitution so as to legally lend $5 million to four railroads.
Minnesota
Territory,
and
45
railroads.
The transcontinental
By 1860, Texas had given 5 million acres and lent about
railroad
legislation,
put
through
by
President
Lincoln in the
$2 million for railroad construction.
1860s,
used
similar
grants,
other
Federal
credits,
and extenBy 1856, local governments in Iowa incurred debts of
sive
Army
involvement,
uniting
the
Pacific
coast
with the
more than $7 million for railroad construction.
eastern
rail
grid.
The city of Milwaukee lent $1.6 million to railroad companies in the late 1850s.
Rail projects of the Yankee statesmen
It is rather well known that Abraham Lincoln, as the Civil
The image of the New York and Boston monopolists domWar President, commissioned the transcontinental rail lines.
inates
the public view of the history of the railroads, eclipsing
But before this, Lincoln also personally brought about the
the
outstanding
leading role of patriotic political leaders in
creation of Illinois’ great railroads.
northeastern
rail
development.
Lincoln first headed “The Long Nine” (all quite tall) group
The
prevailing
spirit of improvement was shown in the
of Whig Party men in the state legislature, who pushed
1812
report
of
New
York State Canal Commission (including
through expenditures for canals and railroads to crisscross the
New
York
City
Mayor
DeWitt Clinton and steamboat invenstate. The Illinois Central Railroad portion of this comprehensive state program failed, despite state financing. Lincoln then
served as attorney and lobbyist for the Illinois Central, work10. Thomas P. Kettell, railroads section of 80 Years’ Progress of the United
States (Hartford, Connecticut: L. Stebbins, 1867).
ing to complete the state’s transportation network. A Federal
EIR
July 17, 1998
National Economy
51
tor Robert Fulton), on the results to be expected from building
the Erie Canal:
“A man’s life is short; the time is not far off when those
who make this report will have passed away. No time, however, is fixed for the existence of a state, and the highest desire
of a patriot’s heart is that the state to which he belongs might
be immortal. . . . And even when our constitution shall be
Great rail projects
raised living standards
The earliest U.S. railroads, government projects with
private participation, as in the 1960s Apollo space program, immediately increased Americans’ standard of
living. The expense and time involved in travel, and
in shipping farm and factory goods, were dramatically
minimized, increasing freedom, productivity, and overall profitability, while making everything more affordable.
These figures, suggesting the change, are taken
from George Taylor’s The Transportation Revolution.
Freight rates per ton-mile
1816
Turnpikes
$30.00 and up
Mississippi-Ohio rivers
downstream
1.30 (1815)
upstream
5.80 (1815)
Erie Canal
Chesapeake & Ohio Canal
New York Central Railroad
Erie Railroad
Pennsylvania Railroad
1853
1860
$15.00
$15.00
1.10
0.25
3.40
2.40
3.50
0.37
0.37
0.99
0.25
2.06
1.84
1.96
Time for freight shipment,
Cincinnati to New York City
1817: Ohio River keelboat to Pittsburgh, wagon to
Philadelphia, wagon or wagon and river to New
York City: 52 days
1843-51: Ohio River steamboat to Pittsburgh, canal to
Philadelphia, railroad to New York City: 18-20
days
1852: Canal across Ohio, through Lake Erie to Erie
Canal and down Hudson River: 18 days
1850s: Steamboat to New Orleans, packet boat to
New York City, 28 days
1852: All rail via Erie Railroad and connecting lines:
6-8 days
52
National Economy
dissolved and our laws be lost in the current of that unending
stream which destroyes all human institutions, the offspring
of our children’s children will nevertheless remain, these
same hills will stand and these same streams flow. . . . [A]fter
the lapse of two thousand years . . . when the records of history
shall have been obliterated . . . this national work shall remain.
It will bear witness to the genius, the learning, the industry,
and the intelligence of the present age.”11
A state enterprise, the Erie Canal was completed in 1825,
connecting New York City and the Hudson River to Lake Erie
and the Midwest. Political allies of President John Quincy
Adams now pressed for the construction of a railway line to
parallel the canal. Such a railroad would connect the Atlantic
port of Boston, the interior of Massachusetts, the Hudson
River, the large undeveloped western area of New York State,
and the Great Lakes. Action on this project came in both New
York and Massachusetts, led by the Adams forces.
The New York & Erie Railroad, incorporated in 1832,
had its route surveyed under direction of the New York legislature in 1834. New York State in 1836 authorized a $3 million loan for it. But the panic of 1837 had ruined the credit of
investors, and the railroad had to stop construction. At a special convention on Oct. 17, 1837, William H. Seward, an
aspiring politician and an avid follower of John Q. Adams
(later, Adams’s biographer), wrote the address promoting the
re-starting of the Erie railroad as a public project.
Seward wrote: “It is well to remember that the experience
of human government affords not a single instance in which
a state or nation became impoverished or subjected to an
irredeemable debt by works of internal improvement. Ambition, revenge, and lust for extended territory, have been the
only causes, and was almost the sole agent, in entailing those
calamities upon nations. Palaces and pyramids, the luxurious
dwellings of living tyrants, and the receptacles of their worthless ashes when dead, have in every country but our own
cost more than all its canals and roads. . . . Egypt, Rome,
Netherlands, England, and France, and even our own peaceloving country, have severally disbursed more in a single war
than was required to complete a system of improvements
sufficient to perfect their union, wealth, and power.”12
Seward’s political lieutenant, Samuel R. Ruggles, put forward as the principal promoter of the Erie rail line, was elected
a few days later to the state legislature and became chairman
of the ways and means committee. Seward was elected governor the following year, on a platform of building transportation infrastructure. In the legislature, Ruggles wrote the 1838
“Report upon Finances and Internal Improvements of the
State of New York.”
The state paid for the revival of the Erie railroad, contrib11. March 14, 1812, quoted in Gerstner, op. cit., p. 48.
12. Frederick W. Seward and William H. Seward, Autobiography of William
Henry Seward, with a Memoir of His Life (New York: D. Appleton & Co.,
1877), pp. 342-343.
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July 17, 1998
uting more than $6 million, with localities donating still more. Virtually
the entire construction of the line was
at public expense. In return, the state
was allowed to appoint several directors to the Erie’s board. In his 1840
annual message to the legislature,
Governor Seward recalled Gen.
George Washington, in 1783 at the
close of the Revolution, having foretold New York’s future inland navigation to Lake Erie. He described the
results of the great projects to open
up the interior districts and cities of
New York State, and allowing the
distant city of Chicago to easily and
cheaply exchange its products with
those of New Yorkers.
Meanwhile, Massachusetts proceeded with the line westward from
Boston. The first leg, the Boston and
Worcester railroad, was completed
Arrival of the first train from New York City through to Jamestown, in western New York.
From Illustrated London News, Nov. 10, 1860.
in 1835, despite opposition from
powerful Tory interests. The key
promoter of the whole project was
Edward Everett, a teacher of Greek, proud of calling himself
in the evening, and was welcomed with rockets and cannon
“the first American to receive a Ph.D. at Germany’s Göttingen
on both sides of the river.
“The Speaker of the Massachusetts House of RepresentaUniversity,” and a close supporter and relative by marriage
tives, the Common Council of Boston . . . and the directors of
of John Quincy Adams. His brother, Alexander Hill Everett,
the railroad, were on board; were received at the ferry by
had been Adams’s private secretary when Adams was U.S.
the Common Council of Albany, and escorted in triumph
ambassador to Russia (1809-11).
by military and fire companies, with torches and music, to
Edward Everett was elected Massachusetts governor on
Congress Hall.”13
the platform of extending the rail line west into New York.
During the extensive celebrations, Governor Seward
Everett put through state government stock and bond purtoasted, “The States of Massachusetts and New York: they
chases totalling $3,700,000, to build the Western Railroad, as
have combined in the prosecution of the Western Railroad;
against the $800,000 which came from private investors. The
may they become as united in maintaining the faith and the
state got four out of nine directorships on the Western, to
integrity of the Union!”14
coordinate with George W. “Pipes” Whistler, the line’s chief
Seward’s son wrote that they celebrated their new power
engineer. Governor Everett promoted a series of other railroad
over nature, having effectively reordered the region’s geograenterprises, all to converge on Boston.
phy: “On the table was bread made of flour which was in the
New York Governor Seward is best known historically as
sheaf, brought in a barrel that was in the tree, at [far-distant]
the Secretary of State for President Lincoln during the Civil
Canandaigua two days before. Sperm [whale oil] candles,
War. Massachusetts Governor Everett is remembered, if at
made by Mr. Penniman at Albany in the morning, were burnall, for delivering the long oration at Gettysburg, overshading in Faneuil Hall [in Boston] in the evening. Salt was on the
owed by Lincoln’s Address.
table which thirty-six hours before was three hundred feet
Keeping in mind how globalist policymakers now deunderground at Syracuse.”15
nounce “state-subsidized projects” in would-be developing
These transport projects created cities such as Buffalo and
countries, see how Seward’s son described the patriotic elaRochester from what had been wilderness, and made New
tion at the completion of the great multi-state rail line:
“The opening of the railway to Boston was considered as
the beginning of a new era in commerce, and was greeted
13. Ibid., pp. 573-574.
with appropriate demonstrations. On the 27th [of December,
14. Ibid., p. 574.
1841,] the first through-train from Boston over the Berkshire
15. Ibid., p. 575.
Hills arrived at Greenbush [on the east bank of the Hudson]
EIR
July 17, 1998
National Economy
53
York City into one of the world’s leading metropolises. Huge
areas were suddenly connected to markets for their farm, forest, and mineral goods, which now took on great economic
value. The resulting increase in land prices represented real
progress, not speculative hot air.
Americans build foreign
railroads, Brits launch war
American nationalists employed the power and resources
of government to develop the U.S. interior with an immense
railroad grid; they built 121,000 miles in 55 years, from the
Army engineers’ 1828 startup of the Baltimore & Ohio, to
the 1883 completion of the Lincoln-commissioned Northern
Pacific out to Tacoma, Washington. This task was accomplished over the resistance of the British faction, the LondonBoston-Wall Street axis, which sought to block the integration
of the West into an American industrial republic.16
We may put this strategic contest between America and
the British Empire into sharper relief by reviewing two cases
of American railroad-building in foreign countries—Russia
and Peru—and by observing Britain’s bloody counteractions.
Russia
Franz Anton von Gerstner, whose 1840 report greatly aids
any serious study of early U.S. railroads, himself built the
very first railroad in Russia in 1837, just before he came to
America. Gerstner’s experimental line covered only a 17 mile
stretch from the Tsar’s palace to St. Petersburg.
Five years later, the Russians were ready for their first
serious railway project. In 1842, Tsar Nicholas I hired “Pipes”
Whistler to build a line from St. Petersburg to Moscow. Whistler had spent the previous several years working on the Great
Western Railway (from Boston to the Erie Railroad). Whistler
moved to Russia and planned and supervised construction of
the 400 mile Russian railway. Philadelphia manufacturers
provided locomotives. Whistler also built Russian rail factories, docks, bridges, and fortifications. At the same time, Russia adopted its first high-tariff system, emulating the Henry
Clay-John Quincy Adams “American System” economic policy, thus protecting against British trade war and launching
Russia’s modern iron industry. Whistler died in Russia in
1848.
The British looked coldly upon this initiative, which
threatened to “Americanize” Russia. Their attitude may be
seen in a diatribe written in 1852 by a high-ranking British
intelligence operative:
16. For the British-financier faction’s 1870s attack on U.S. railroad building,
see Anton Chaitkin, “London’s Murder of McKinley Sets Up U.S.-U.K.
Special Relationship, War,” EIR, March 24, 1995.
54
National Economy
“Russian railroads seem to be meant for Russian soldiers;
and it is the facility thus afforded of moving large bodies of
men that invests this mode of communications in Russia with
an importance which does not attach to it in Great Britain, or
perhaps any other country in Europe, to an equal extent. When
St. Petersburg, Moscow, Odessa, and Warsaw become connected, Russia assumes an entirely new position with regard
to the rest of Europe. A few days, instead of many months,
will then suffice to concentrate the armies of the north and
south upon the Austrian or Prussian frontiers. Through this
same quarter of the world, many hundred years ago, poured
those barbaric hordes which overran civilized Europe; it
would, indeed, be a singular testimony to the spirit of the age,
if the next invaders made their descent by means of railroads.”17
This is the traditional British hate-propaganda which today uses the trick phrase, “dual-use technology.” Of course
the Russians could use railroads to move troops (though they
built their lines with a different gauge from that of western
Europe, to defend against invasion!). But the Americans acted
to create an anti-imperial concert of modernized, sovereign
nations.
Britain responded by launching the Crimean War against
Russia. Alexander II, who became Tsar during that 1854-56
bloodbath, was so shocked at British superiority and Russian
backwardness, that he moved his country rapidly into modern
times, allying Russia with Abraham Lincoln and inviting in
new American railway builders.
Peru
Our other foreign case study is of a project generally unknown in the United States, but famous to Peruvians: the
railroads built in the 1870s across the Andes Mountains by
an American, Henry Meiggs. This was the most ambitious
railway program ever planned in South America. Meiggs is
revered in Peru, and hated with a hot passion in London and
in U.S. Anglophile circles. Meiggs and his Peruvian sponsors,
including economist and statesman Manuel Pardo, proposed
to cut rail lines from the Pacific coast across the Andes into
the interior. Aiming to integrate the continent economically,
they proposed to transform social relations and make the
backward peasantry into modern citizens.
Henry Meiggs had a “spectacular” life, to go with the
railroads he ultimately built.
He was born in 1807 in the town of Catskill, New York,
on the Hudson River. As a young man, he ran a family lumber
enterprise in Catskill, and in Boston. From 1828 into the
1830s, U.S. Army engineers surveyed and supervised construction on a rail route from Catskill northwestward. The line
17. Laurence Oliphant, The Russian Shores of the Black Sea in the Autumn
of 1852, quoted in Albert Parry, Whistler’s Father (Indianapolis: The BobbsMerrill Co., 1939), p. 1.
EIR
July 17, 1998
Left: El Infiernillo Bridge over the
Rimac River, in the Andes
Mountains, the Lima-Aroya
branch of the Central Railway of
Peru built by Henry Meiggs.
Above: Medallion honoring
railroad builder Henry Meiggs,
issued Jan. 1, 1871 by Peru’s
Corps of Engineers.
through Catskill was to be one of two rail links from Boston
to Lake Erie, designed to bring sudden prosperity to precisely
Meiggs’s kind of business. The Army officers, led in 1831 by
William Gibbs McNeill, took the rail line across the Catskill
Mountains to meet the Erie Canal, using many bridges and
scaling sharp gradients. When the Van Buren depression of
1837 wrecked Meiggs’s business, and stalled the railroad construction, New York restarted the Catskill and Canojoharie
Railroad with a $300,000 state loan.
With this historic, state-sponsored, mountain rail-building enterprise as his inspiration, Meiggs went into business
in New York City, and then, during the California Gold Rush,
moved out to San Francisco. Meiggs became a political leader
in the patriotic pro-Union faction running the California Democratic Party. An alderman and entrepreneur, he built the
North Beach district of San Francisco, founded the San Francisco Philharmonic Society, built the Music Hall, and sponsored the best Classical music talent. His faction, led by New
York-bred political boss David Broderick, Gov. John Bigler,
and banker (later general) William T. Sherman, came under
EIR
July 17, 1998
murderous attack by pro-secession/pro-slavery operatives,
including the “vigilantes.” Under terrible financial pressure,
Meiggs fled with his family onto the high seas, pursued unsuccessfully by an armed mob of creditors against whom he had
defaulted. He eventually made good on all his California
debts.
Meiggs sailed to Chile. California Gov. John Bigler, the
U.S. ambassador there, met Meiggs and recommended him
highly to Chilean leaders. As Bigler’s brother William had
been governor of Pennsylvania and president of the Philadelphia & Erie Railroad Company, Meiggs was now evidently
well enough connected to make an ambitious new start, late
in life. He undertook to organize and manage difficult railroad
constructions in Chile, whose success came to the attention
of the nationalist faction in neighboring Peru.
During the American Civil War, Europeans took advantage of U.S. military preoccupations to try to restore imperial
rule: Britain, France, and Spain invaded Mexico, and Spain
invaded Peru. The American nationalists and military, as they
became able to do so, sided with the Hispanic republics, and
National Economy
55
the European armies withdrew. Under President José Balta
(1868-72), Peru’s government hired Meiggs to build an astonishing set of railroads into the Andes. The lines ran from the
southern port of Mollendo to Arequipa, on to Puno and Juliaca
en route to Cuzco; and from Callao next to Lima, up the
Rimac Valley and on across the heights to Huancayo. Meiggs
employed his laborers under uniquely humane conditions,
and the results were considered a wonder of modern times,
the most daring and ingenious mountain engineering known
to the world.
LaRouche: Railroads and
the Eurasian Land-Bridge
Interviewed June 19, 1996, on “EIR Talks,” Lyndon
LaRouche placed his “Eurasian Land-Bridge” proposal
in the tradition of America’s successful railroad development.
You have to take the railroad issue, and treat that not as a
rail line, not as transportation that lies across the desert.
. . . The way this has to be done: If people get some good
maps which give some degree of the topography of the
area, and population density, water, and things like that—
Take the railroad maps together of China, and of Western
Europe. Look at the inland waterways, the canals, and
other transportation devices.
Now, looking across these vast reaches, going eastward from Berlin, which is the natural rail hub in Europe
for going to China and India, and there, toward China,
and you find you have vast expanses, which are virtually
undeveloped, with low population densities, with a lot of
natural resources, but very little development. And, you’re
going to run a rail line, say, from Berlin as a hub, also, to
Brest, in France, and so forth; but, as a hub, out to places
like Beijing, and across to the islands, and down into the
main island of Japan, and down into India, and so forth.
And, you find that you’re putting track (in this case, it
might be magnetic levitation), across very vast expanses,
with very little in between. Very few places from which to
pick up freight or passengers, or dispatch them, at least,
in large quantities. So, that gets pretty expensive, on the
surface of it: to transport something thousands of miles,
and that’s what it amounts to, in some cases, across the
Eurasia heartland, with nothing there; very few canals,
very few—a limited number of roads, and so forth, into
China, into the heavily populated part of China, or the
heavily populated part of South Asia.
56
National Economy
On New Year’s Day, 1870, Meiggs spoke at a celebration
in Lima marking the opening of his second Peruvian project,
the Central Trans-Andean Railway, known popularly as “the
railway to the moon.”
Meiggs told the proud civic gathering that the object was
to “scale the summits of the Andes and to unite with bonds of
iron the people of the Pacific and the Atlantic. . . . Its immense
transcendancy will very shortly be felt in all spheres of human
activity. This happy event proclaims in the future a great
social revolution whose triumph and whose benefits are en-
How do you pay for that? Well, we did that, in the
United States, with our railroad development. As people
may recall, in the middle of the last century, we used rail
to create development corridors along the line of the rail
route, and we populated the area with farms; we populated
the area around the farms, with new urban communities,
and, apart from the mess that was made of it during the
course of this century, and under the Cleveland administration, and so forth, in the past century, it was very good. We
showed the way of how to develop the country.
Now, therefore, when you build a railroad across Eurasia, you’re not just going to build a rail track, or a magnetic levitation track. You’re going to build a corridor, a
development corridor. And, that development corridor
will reach to approximately 50 kilometers on either side
of the main trunk line, which may be defined by a canal, a
canalway, or inland waterway, or by railroads, or so forth.
Now, when you do that, what you’re going to do, is
put along the same right of way as your railway track,
you’ll put things like fuel pipelines, freshwater pipelines,
and other logistical devices. Your power grid will be oriented, in that region, to your main highway, your main
artery of transportation; warehousing systems. You will
then reach out, in natural centers, which are natural urban
centers, and just plan them, as we did in the West; and, you
will go out to 50 miles, or 30, 40 miles or so, on either side
of your main trunk line. And, you’ll develop farms, you’ll
develop industries. You’ll move population, and so forth.
In that way, every kilometer of track, in a sense, is paying
for itself because of the economic development along the
right of way.
Now, the Chinese have caught on to this; and, they’ve
proposed that they’re pushing for the rail line, to also develop other things, like pipelines and power lines, and so
forth, to match this. It’s very intelligent; and, the United
States should say, “We want to get into this with both
hands,” and help them. Our helping them in this, would
help revive some of our moribund industry, and get some
jobs going in the United States. And, the Europeans should
do the same thing. So, I’m very much for it.
EIR
July 17, 1998
trusted to the locomotive, that irrepressible battering ram of
modern civilization. At its pressure will fall those granite
masses which physical nature has until today opposed to the
agricultural, industrial, and mercantile agrandizement of the
Peruvian nation. Its whistle will awaken the native race from
the lethargy in which its dominators, supported in abjection
and isolation, have kept it for so many centuries under . . .
error and ignorance. . . .
“Steam, which shortens time and cuts distances, is the
most rapid and secure means of introducing life and material
development to the backward Amazonian regions.”18
The Meiggs projects had long been envisioned and promoted by Peru’s nationalist economist Manuel Pardo. In an
1862 booklet calling for development of Andean railroads,
Pardo wrote of the need for a true national revolution:
“If railways are called to exercise a redeeming mission in
the wild deserts of America, no less are they to effect a moral
and intellectual revolution in the backward and ignorant
masses that form the bulk of our population. Means of communication will exercise their beneficent influence in two
ways. In one way by giving mobility to men who today pass
their life and die nailed like stones or plants where nature cast
them down, for mobility for them is shortly material liberty.
. . . Mobility also brings enlightenment; not, of course, the
enlightenment of books and theories, but the practical science
of life which frequent communication with men gives.”19
Pardo challenged the supposed inevitability of a backward state of the populace that allows oligarchs to rule by
manipulating mobs or terrorists:
“Merely bettering their moral condition can give them
those principles of personal dignity and independence without which they can never be anything but miserable helots,
commoners attached to the soil and blind instruments of everyone who cuts a cudgel to order them about. By bettering
the material condition of our people, we shall oppose the most
effective barricade against the advances of tyranny . . . [and]
against the forces of the anarchists. That is the second means
whereby railways ought to exercise their moral influence
upon populations.”20
The British Empire mounted a political, diplomatic, financial, and ultimately military offensive to stop this menacing initiative. President Balta was murdered in 1872, and was
succeeded as President by Manuel Pardo. Squeezed mercilessly by international finance, Meiggs and the Peruvians
were unable to carry the project across the continent into
Argentina or Brazil, thus preventing the uniting of the conti18. Watt Stewart, Henry Meiggs, Yankee Pizarro (Durham, North Carolina:
Duke University Press, 1946), pp. 61-62. This biography, a raving hatchet job
against Meiggs, is openly favorable to the British financiers who eventually
swallowed up Peru.
nent. Peru was bankrupted, and Meiggs died, impoverished,
in 1876.
In 1879, the British ran a puppet Chilean Army and Navy
attack against Peru, known as the War of the Pacific. The
invasion aimed at destroying Peru as a nation, and smashing
up the newly built railroads, which were the greatest in South
America. U.S. President President James Garfield, inaugurated in 1881, replied with U.S. overt and covert aid to Peru,
at the same time cooperating with railway projects in Russia,
and allowing Americans to sponsor the revolutionary underground against British rule in Ireland. President Garfield and
Tsar Alexander II were both assassinated within the space of
a few months in 1881.
Garfield’s Secretary of State, James Blaine, testified in
Congress about what had happened in Peru: “The . . . English
bondholders . . . put up the job of this war on Peru. . . . England
sweeps it all in. . . . The iron-clads that destroyed the Peruvian
Navy were furnished by England. . . . It is a perfect mistake
to speak of this as a Chilean war on Peru. It is an English war
on Peru, with Chile as the instrument. . . . Chile would never
have gone into this war one inch but for her backing by English
capital, and there was never anything played out so boldly in
the world as when they came to divide the loot and the
spoils.”21
Winning this war, the British financiers, led by a British
immigrant to America, W.R. Grace, in their own name then
foreclosed the entirety of Peru, putting the railroads and virtually all other enterprises into British ownership.
W.R. Grace, the founder of the imperial trading company
that ran western South America for the British (and spun off
Pan American Airways), rendered the financiers’ verdict on
Henry Meiggs, as paraphrased in an American newspaper:
“New York, October 12 [1877]—W.R. Grace, head of
the chief Peruvian firm in this city, speaking of the financial
condition of the late Henry Meiggs at the time of his death,
says he thinks that really nothing but a mass of worthless
securities and contracts are left behind Meiggs. . . . Meiggs
was a visionary man, who carried out vast schemes, but they
were often things that a sound business man would consider
worthless.”22
In recent years, Peru’s Shining Path terrorists, whose terrorist operations receive backing from London, have sought
to destroy Peru’s railroads, and all advanced civilization. Russia is collapsing under the misrule of plundering speculators,
its infrastructure collapsing. In the United States, the rail system has ground to a halt, sucked dry by financial adventurers.
The looters will not invest a penny in building up a rail line;
but they are free with their warnings, that no nation must ever
again dare to do so.
19. Manual Pardo, Estudios sobre la Provincia de Jauja, Lima, 1862, pp. 4748, quoted in Stewart, op. cit., p. 73.
21. Congressional Testimony, House Report, 47th Congress, 1st Session,
No. 1790.
20. Ibid., quoted in Stewart, op. cit., pp. 73-74.
22. Stewart, op. cit., p. 341.
EIR
July 17, 1998
National Economy
57